Week of 4/5/2021 Market Recap

1. Robust Heading into Finals Week

After refueling the past few weeks, bullish investors once again took over the market as the S&P, NASDAQ, and Dow Jones all rose of over 2% this past week. Large-cap growth stocks outperformed so-called value stocks for the second week in a row. In contrast to growth stocks, oil, as well as most commodities, fell. Even the ship stuck in the Suez Canal couldn’t make up for investors’ belief that the oil demand is dropping. As electric vehicles become more popular, the amount of oil usage will likely drop severely, leading to what we saw this past week.

In total, the strong jobs report released on Monday shouldered most of the burden of boosting economic growth this week. Looking to the future, investors are hopeful for future growth heading into quarterly earnings season (mid-April). Quarterly earnings season will truly serve as a test of the COVID recovery. Like a game of March Madness, if a company loses their edge come earnings time, they’ll be sent home with major losses.

2. COVID-19 Update

As states open up restaurants and lift restrictions, US COVID-19 maintains an upward trend for the fourth week in a row. Less social distancing and fewer mask mandates are likely fueling this brief spike in cases. Without intervention, the US may likely see another spike in cases heading into the summer season. Cases are up another 2% this week, after an increase of 3.4% last week.

The state of Georgia became the 3rd state to shut down the Johnson & Johnson vaccine sites after adverse reactions occurred. This vaccine has been likened to a miracle for communities stricken with poverty primarily because it only requires an efficient one shot. Most CDC doctors believe these adverse reactions are due to the vaccine’s high potency and that there is no serious issue at hand.

Finally, scientists have presented a growing pool of evidence that as many as 1 in 3 COVID-19 survivors will deal with mental health disorders or neurological disorders within a half-year of the infection.

3. Semiconductor Shortage Spell Trouble for Tech Stocks

Semiconductors are the bread and butter behind technology ranging from medicine to communication. As the backbone of most technology, the demand for semiconductors has skyrocketed due to the pandemic and electric vehicles. Consumer electronics are in even higher demand during the pandemic, leading to a shortage of semiconductors.

Even more concerning is the geopolitical risks for semiconductor production if China invades Taiwan. Both countries are integral in the supply chain of semiconductors, so President Biden is pushing for the creation of a less-reliant supply chain of these. If China does invade Taiwan and the demand for semiconductors continues to grow, the price for these integral parts will lead to higher-priced tech and lower margins for companies that buy semiconductors. Already, Nintendo has had to slow down the production of their flagship devices due to this shortage. In the worst-case scenario, companies might have to bid for semiconductors, raising the price even higher, leading to higher costs.